This report contains forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, among other things:

? the ability to successfully complete development and commercialization of our technology;

In addition, in this registration, we use words such as "anticipate," "believe," "plan," "expect," "future," "intend," and similar expressions to identify forward-looking statements.

We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this registration. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this registration may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.

Overview

The Company is engaged in the research and development of all-fuel, eco-friendly engine and parts technologies for integration and use within customers' systems. The Company anticipates that it will concentrate on the following engine models (power ratings): Mark 1 (2.7 KW- 6 HP), Mark 3 (12 KW-22 HP) and the Mark 5 (60 KW- 100 HP). Additionally, revenue is anticipated via sales of component parts and licensing fees.

Corporate Structural Actions. The Company's focus is on revenue and funding derived from sales of engines and parts for integration into customers applications and systems. With delivery of our engines and material component parts, we are transitioning from the convertible notes used to finance the Company over the last 18 months.

Results of Operations

Three Months Ended June 30, 2018 Compared to Three Months Ended June 30, 2017

Revenue. The Company had no revenues in the quarters ended June 30 2018 and June 30, 2017.

Gross Profit. In the quarters ended June 30, 2018 and 2017, the company had no gross profit.

Operating Expenses.

Operating expenses incurred for the quarter ended June 30, 2018 were $329,706 as compared to $282,542 for the same period in the previous year, an increase of $47,164 or 17%. The majority of the variance was due to a higher research and development expenses of $28,304 (50%) attributable to increased engineering spending and General and Administrative expenses of $17,872 (8.1%) from consulting and professional fees.

Operating Loss. The operating losses for the quarters ended June 30, 2018 and 2017 were $329,706 and $282,542 respectively, a variance of $47,164 or 17%, due to the factors outlined above.

Other (Expense) Other expense for the quarter ended June 30, 2018 was $367,845 versus a net loss of $220,049 for the same period in the prior year, a variance of $147,796 (67%). In the second quarter of 2018 the company recognized a non-cash derivative fair value accounting related charge of $468,000 and $35,845 of interest expense partially offset by an expense accrual reduction of $136,000. The 2017 other expenses included $136,049 of interest expense, and $84,000 non-cash derivative fair value accounting related charges.

Net Loss and Loss per Share. The net loss for the quarter ended June 30, 2018 was $697,551, compared to a net loss of $502,591 for the same period in the previous year, a variance of $194,960 or 39% The net loss per weighted average share was $0.00 for both the current quarter and the prior quarter.

Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2017

Revenue. The Company had no revenues in the six months ended June 30, 2018 and June 30, 2017.

Gross Profit. In the two quarters ended June 30, 2018 and 2017, the company had no gross profit.

Operating Expenses.

Operating expenses incurred for the six ended June 30, 2018 were $578,421 as compared to $640,953 for the same period in the previous year, an decrease of $62,532 or 9.8%. The majority of the variance was due to a lower General and Administrative expenses of $136,721 (25%) from consulting and professional fees, partially offset by higher research and development expenses of $69,571 (72%) attributable to increased engineering spending.

Operating Loss. The operating losses for the six months ended June 30, 2018 and 2017 were $578,421 and $640,953, respectively, a favorable variance of $62,532 or 9.8%, due to the factors outlined above.

Other Expense. Net other expense for the six months ended June 30, 2018 was $858,750 versus a net loss of $664,424 for the same period in the prior year, a variance of $194,326 or 29%. In the first half of 2018 the company recognized a non-cash fair value derivative debt related charge of $892,968, and $104,201 of interest expense partially offset by an expense accrual reduction of $136,000. The comparable period for 2017 other expenses includes $407,467 of non-cash fair value derivative debt related charges, $186,023 of interest expense and a $70,934 loss on settlement of debt and liability with company stock.

Net Loss and Loss per Share. The net loss for the six months ended June 30, 2018 was $1,437,171, compared to a net loss of $1,305,377 for the same period in the previous year, a variance of $131,794 or 10% The net loss per weighted average share was $0.00 for both the current six months and the comparable period of the prior year.

Liquidity and Capital Resources

At June 30, 2018, the approximate net working capital deficiency was $5.77 million as compared to a deficiency of $5.44 million at December 31, 2017, a variance of $.33 million (6%).

For the six months ended June 30, 2018, cash increased by $29,742. Funds were provided by $249,500 in proceeds from the series A preferred stock subscription, a $143,468 increase in accounts payable and accrued expenses and a $130,287 net increase in related party accrued expenses and notes payable. Funds were used by the net loss of $1,437,171. Non-cash charges were $892,968 from fair value derivative accounting charges and $30,764 of amortized derivative debt discounts.

For the six months ended June 30, 2017, cash decreased by $591. This is reflective of funds used by the net loss of $1,305,377 partially offset by funds provided by debt proceeds of $124,650, higher accounts payable and accrued expenses of $414,086 and a net increase of $152,025 in related party notes payables and accrued expenses. Non-cash charges include a $70,934 loss recognized by settling debt with common stock and $493,083 of non-cash charges from fair value derivative accounting and discount amortization.

Cash Flow Management Plan

As shown in the accompanying financial statements, the Company sustained substantial operating losses and other expenses for the six months ended June 30, 2018 of approximately $1.4 million. Cumulative operating and other losses since inception are approximately $64.4 million. The Company has a working capital deficit at June 30, 2018 of approximately $5.8 million. There is no guarantee whether the Company will be able to support its operations on a long-term basis. This raises doubt about the Company's ability to continue as a going concern. If additional funds cannot be raised or otherwise generated, the Company may be forced to reduce staff, minimize its research and development activities, or in a worst-case scenario, shut-down operations.

We are engaged in the research and development of all-fuel, eco-friendly engine technologies. Several prototypes of these engines are current beta tested, pre-production tested or nearing completion with 2 models currently in limited production. While we started to generate revenue from its operations as early as 2008, it has not had material or consistent revenue in each of the last two fiscal years. For us to maintain and expand our operations through the next 12 months, we will seek the completion of our manufactured products by our two manufacturers of the engines and the integration of the engines into a generator package to be sold to distributors. We will also continue license agreements and development agreements that provide up-front or progress payment funds to us. We are receiving monthly payments from our investor and anticipate for that to continue as they proceed with their due diligence.

Our goals for the remainder of 2018 and 2019 are to sell the Mark 1 and Mark 3 engine (with the TAW generator) to commercial customers and distributors. We are developing the Mark 5 engine for incorporation into solar power systems that will be sold via our investment partner.

Funding in 2018 to complete various Company projects has been negotiated with an investor that wants to integrate Cyclone technology with its Solar products. Final testing of the Mark 10 1500 horse power unit is projected by year end. The new Thermal Storage unit for the 1-Megawatt Microgrid market and the Cyclone solar trough is expected to be manufactured early next year by our teaming partner. It is currently under Beta testing.

Through the first half of 2018, an investor provided $249,500 for additional development of the Cyclone Engines as part of a binding letter of intent for $5 million. The consideration is to be the issuance of Preferred A shares, convertible into effectively undiluted 20% of the Common shares of the Company at the completion of funding. The funds are to be paid over a 2-year period upon reaching various milestones.

Our auditors have issued a going concern opinion for the years ended December 31, 2017 and 2016. Management is optimistic, however, that revenue can be generated shortly, and that funding has been secured in 2018 through 2020 to maintain operations and development at the current and at an accelerated pace.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, that would have been established for facilitating off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in those types of relationships.

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